Investing in Main Street Over Wall Street: Community Investment Cooperatives

My dream: To see more of us investing our dollars in Main Street over Wall Street. Individuals and businesses in Northeast Minneapolis, MN had the same dream -- and banded together to form a community investment cooperative called the Northeast Investment Cooperative (NEIC). Members of this cooperative pool together their money to buy and develop real estate that they sell or lease to locally owned businesses.

“For most of us, investing means mutual funds or a 401k. We hope those funds grow, but are only vaguely aware of how that money is being used,” said Seth Erling, NEIC member. “With the NEIC, we see our investment everyday. The return is not only to our personal financial benefit, but to the social and economic benefit of the whole community.”

What is a Community Investment Cooperative?

Let me back up -- just in case you haven’t read the article about Northeast Investment Cooperative. Individuals and businesses based in Minnesota can join NEIC for $1,000 to collectively purchase, renovate and manage commercial and residential buildings in Northeast Minneapolis. Like the Monadnock Food Co-op, NEIC members receive one vote to elect a board of directors that will govern the business. Members can choose to invest more money in the co-op, but they will still only receive one vote.

“When I found out my neighborhood was coming together to take change into their own hands, and not just wait for someone else to do it, I wanted to do my part,” said NEIC member, Brian Linder. “My first worry was, ‘Can I afford this?’ Then I realized that if I truly believed in our community, how could I afford not to.”

Currently, NEIC’s 231 members have purchased three buildings. One was sold to a bicycle repair shop and the other is leased to two locally owned businesses -- a cooperatively owned brewery and a German bakery. NEIC is now seeking a tenant for its newest building.

As the NEIC website states, “We believe that by investing patient capital, actively recruiting local businesses to occupy our property, and supporting those businesses as they grow and thrive, we can bring transformative change to Northeast Minneapolis, one building at a time.”

Can we start one here?

Could we leverage this business model to purchase, develop and manage real estate in ways that enhance local ownership and fill empty storefronts? Or could it help us create affordable housing options for more of us? Could it make it easier to fund environmentally sustainable development projects like Monadnock Sustainability Network’s Community Supported Solar project?

The first and biggest hurdle: we need to confirm that this business model is exempt from state securities law. Securities laws require a business to register with the state and federal government before it can sell shares to investors. It’s a costly and time-consuming process. Real estate companies are exempt from this process at the federal level, but our state may have laws in place that limit this model, making it too cost-prohibitive for us to do right now. If real estate companies are not exempt in New Hampshire, we might then decide to take a very long-term approach and push for cooperatives to be added to exemptions at the national level. Negotiating securities law is not my cup of tea -- is it the beverage of choice for any of our readers?

Next, it would take a lot of people power to establish a cooperative like this. Just like our food co-op, it took many, many, many volunteer hours to bring that cooperative to where it is today. Do we have the right people, with the right skills, who have enough time to make this happen?

Could we transform our communities one building at a time? If you’re interested in exploring community investment cooperatives more with us, please drop us an email.